Progressing our new priorities: Innovation, Performance, Trust Emma Walmsley, CEO JP Morgan Conference 9 January 2018
Cautionary statement regarding forward-looking statements This presentation may contain forward-looking statements. Forward- looking statements give the Group’s current expectations or fo recasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, ‘believe’, ‘target’ and other words and terms of similar meaning i n connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulations, UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the US Securities and Exchange Commission (SEC). All investors, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements. Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that ar e beyond the Group’s control or precise estimate. The Group cautions investors that a number of important factors, including those in this presentation, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D ‘Risk factors’ in the Group’s Annual Report on Form 20 -F for 2016. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this presentation. A number of adjusted measures are used to report the performance of our business. These measures are defined in our Q3 2017 earnings release and Annual Report on Form 20-F for 2016. All expectations and targets regarding future performance should be read together with “Assumptions related to 2017 guidance and 2016- 2020 outlook” on page 34 of our Q3 earnings release. 2
Balanced business to deliver sustainable growth and returns to shareholders Common goal to improve health, from prevention to treatment Therapeutic and Vaccines Consumer Pharma category leadership Healthcare Global opportunities Broadest portfolio Leading positions in Category leadership with leading position HIV and Respiratory in Respiratory, Pain in meningitis and Strategic and Relief and Oral Health opportunity in shingles operational synergies Balanced set of cash flows and returns On track with operating performance; growth in all 3 businesses and improvement in group operating margin 9m through Q3 2017 3
Key objectives 2017-2020 Prioritise Pharma and R&D focus - Group sales 5-year CAGR to 2020 - Maximise value from low to mid single digit new product launches - Make the right choices to develop early-stage pipeline Consumer Drive newly scaled - Vaccines Pharma Healthcare Consumer and Vaccines - Improve cash generation Adjusted EPS 5-year CAGR to 2020 mid to high single digit - Rigorous capital allocation - More performance based culture 4 *All 2020 outlook statements are at constant, 2015 exchange rates. The CAGRs are 5 years to 2020, using 2015 pro-forma as the base year.
3 priorities for all 3 businesses Innovation Performance Trust 5
Building a winning team Significant appointments in senior roles 3 new executive team members Dr Hal Barron Luke Miels Karenann Terrell Chief Scientific Officer President, Global Chief Digital & and President, R&D Technology Officer Pharmaceuticals Focus on top talent for New hires from including: ~40% Calico, Novartis, Pfizer, ~370 critical roles of Executive Team -1 (top 125) Walmart, AstraZeneca, Teva, roles transitioned Google, Unilever 6
Shingrix: a new standard of prevention Innovation for shingles ACIP preferential recommendation Building a blockbuster ~100m US adults should receive Shingrix 1 Eligible for revaccination Strong clinical profile ~20m - >90% efficacy across identified age groups 2,3 - Sustained efficacy 3 Age 50-59 ~42m Building access and awareness in US - Reimbursement discussions underway Age 60+ not yet vaccinated ~40m - Building physician & pharmacy awareness - Coming soon: Create awareness in adults > 50 1. Dooling K. Considerations for the use of herpes zoster vaccine. Presented at the Advisory Committee on Immunization Practices, US Centers for Disease Control and Prevention. October 25, 2017 7 2. Does not include immunocompromised population 3. Lal H et al. Efficacy of an Adjuvanted Herpes Zoster Subunit Vaccine in Older Adults. N Engl J Med. 2015;372:2087-96; Cunningham et al. Efficacy of the herpes zoster subunit vaccine in adults 70 years of age or older. N Engl J Med. 2016;375:1019-32.
Prioritising to strengthen the pipeline in Pharma Innovation Development capital focus on 2 core and 2 potential therapy areas Capital Therapy areas Prioritised assets Respiratory Trelegy (closed triple) PI3K δ danirixin HIV/ Juluca (DTG+rilpivirine) Infectious diseases DTG+lamivudine cabotegravir + rilpivirine 80% Immuno- tapinarof inflammation RIP-1 anti-GM-CSF Oncology BCMA NY- ESO-1 Oncology BET OX-40 ICOS Future pipeline daprodustat 20% optionality anti-SAP 8
Accelerating delivery in Respiratory Innovation Ellipta: driving continued leadership in a large and growing market Consistently demonstrated Unprecedented exacerbation effect with TRELEGY in COPD superiority in COPD 15% 25% 35% RELVAR/BREO 1 ANORO 1 SYMBICORT 2 TRELEGY reduction vs reduction vs reduction vs BREO 6 ANORO 6 Symbicort 7 INCRUSE SPIRIVA 3 ANORO STIOLTO 4 IMPACT data submitted for publication Usual care in COPD 5 sNDA filed November 2017 RELVAR/BREO 1.IMPACT: TRELEGY demonstrated a 15% reduction in moderate/severe exacerbations vs BREO and 25% vs ANORO 6.Annual rate of on-treatment moderate and severe exacerbations (IMPACT) 2.FULFIL: TRELEGY demonstrated a benefit over SYMBICORT on lung function/SGRQ 7.Annual rate of on-treatment exacerbations at week 24 (FULFIL) 9 3.201316: INCRUSE demonstrated a benefit on lung function over SPIRIVA SYMBICORT is a trademark of AstraZeneca; SPIRIVA and STIOLTO are trademarks of Boehringer Ingelheim 4.204990: ANORO demonstrated a benefit on lung function over STIOLTO 5.SALFORD LUNG STUDY: BREO demonstrated a benefit on moderate/severe exacerbations vs. usual care
̶ ̶ ̶ ̶ ̶ ̶ ̶ Accelerating delivery in Respiratory Innovation Nucala: A practice changing product with significant growth opportunity Strong uptake Highly competitive profile Opportunity to grow Effective in other Consistent exacerbation reduction – NUCALA US sales growth rate in SEA population 1 : eosinophilic diseases: faster than XOLAIR in second year post launch (year 2 vs year 1) EOS > 150 cells/µl: 53 - 58% US approval of use in EGPA reduction in exacerbations approved December 2017 EOS > 300 cells/µl: 61 - 64% US regulatory submission Global sales since launch for use in COPD filed reduction in exacerbations 91 m Global November 2017 OCS reduction 50%, sales (£m) 73 m 59 m sustained up to 1.5 years 2 44 m 20 m 31 m 7 m 1 m Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Global sales in £m at actual exchange rates 10 EOS: eosinophil; OCS: oral corticosteroid; SEA: severe eosinophilic asthma; EGPA: eosinophilic granulomatosis with polyangiitis 1. MENSA and MUSCA studies 2. SIRIUS and COSMOS studies
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